So you've decided you want to buy a house?
Buying a house is littered with dangers and pitfalls that can be somewhat daunting, even for people who have had mortgages for 20 years. As a mortgage advisor myself I can whole heartedly attest to these dangers having gone through the house-buying process with very little knowledge and understanding of what was to lie ahead.
To help you through the process I have offered 5 Top Tips to do before taking a mortgage.
No need to pay for advice via a broker
Since the changes in financial regulators, Banks and Building Society’s are much more concerned with making sure that you leave with the right mortgage, as opposed to selling you products that earn them the most commission. With the changes in regulation the vast majority of Banks and Building Society’s now offer free mortgage advice over the phone directly with them. Brokers are good if you don’t have any time to research yourself and you can afford them…but you can receive more tailored and safe advice from your high-street Bank or Building Society these days
Don’t ruin your credit score
Some first time-buyers will yet to have established a strong credit score AKA ‘credit ‘file’ and you will need to protect this as much as possible if you are going to receive a loan as big as a mortgage. Any time you apply for credit or a mortgage with a lender this will leave a ‘mark’ against your credit ‘file’. The more ‘marks’ you have against your credit ‘file’ the more unlikely you are to be accepted for credit or loans. The reasoning behind this is because it gives institutions the illusion that you are desperate for credit and looks unfavourably against you. Therefore when searching for a mortgage ALWAYS use the online calculator which you can find on ALL Banks and Building Society’s websites. This doesn't leave a ‘mark’ on your credit file and will ensure that you protect your credit score whilst allowing you to maximise your research
Research equity schemes
With the rising standard-of-living costs; saving for a deposit is neigh-on impossible. However there are lots of avenues and resources that can help you achieve your dream home without the long drawn-out heartache of saving for a deposit. The government have lots of schemes that support first time-buyers (FTB) to get on to the property ladder. The ‘Help to Buy’ scheme allows FTB’s to purchase a new-build property; up to £600,000, so long as you can front up 5% of the value of the property as a deposit yourself. The government will actually lend up to 20% of the loan and the other 75% will need to be mortgaged through a financial institution. This is a great way to save years of scrimping and get the keys to your first home sooner.
Research institutions that offer cash-back incentives
It’s no secret that Banks and Building Society’s pay their bills through offering mortgages to consumers and earning interest on those loans. In order to boost their earnings institutions will offer ‘cash-back’ incentives and savings accounts during the house-buying process to drum up business. This is fantastic as you will receive a lump-sum of anything up to £2,500 or more upon completion of your mortgage. As a first time-buyer this is a life-saver and will help with initial outlay of house-essentials like furniture and decorating
Understand the additional cost of bills when buying your house
Living at home with your parents has many benefits…free food, cleaning and most importantly free bills. When buying a house the responsibility - financially - grows exponentially. Therefore its really important to factor in cost of living as well as looking at the cost of your monthly mortgage repayments. Home insurance is part of your mortgage contract that you must have in place. Depending on the area of where you’re buying council tax can be quite steep. The efficiency of the heating in your home is very important especially with rising energy bills. So always make sure that you factor these types of costs in to the process otherwise you could leave yourself not being able to enjoy your first home.
So there you have it, 5 Top Tips to do before buying a house. For more information about fees attributed to mortgages please go to What fees to look out for when taking a mortgage